As far as rebound efforts go, Tuesday’s bullishness wasn’t exactly what the optimists wanted to see. The gain didn’t undo all of Monday’s damage, and the advance the market was able to muster was a low-volume effort. Generally speaking, for a move to have any follow-through, it needs more – not less – participants.

In retrospect, one can’t help but wonder if Monday’s encounter with (and support at) the S&P 500’s 200-day moving average line is the only thing holding the sellers back. It might be enough, but it might not be enough either.

Take a look. Clearly, there’s something going on with the 200-day average line (green). One day doesn’t make a trend though. Indeed, one day didn’t even stop the bigger-picture pullback presently underway.

Maybe it will. Maybe it’s going to be a multi-day process. Or, maybe the lack of trading volume behind the effort speaks loudly and clearly about the lack of faith that a rebound is looming.

Makes sense. The sellers have been more persistent now than they’ve been in well over a year, and nobody can really argue that the gains seen since late 2016 have been unusually consistent. Now it’s time to make up for lost time, injecting the profit-taking that should have unfurled several times in 2017.

And Tuesday’s lack of volume is the big red flag… though the 20-day moving average line’s move under the 100-day line isn’t exactly something to dismiss.

Our take is the same as the one we posted on Monday. That is, there may be reason enough to expect a dead-cat bounce from here. There’s just no assurance it’ll go anywhere. The S&P 500 has room and reason to test the 20-day moving average line (blue) at 2693 before peeling back. It will take a move above that line to really get the market back in a bullish mood/mode. Just don’t jump to conclusions if the buyers end up doing something with Tuesday’s effort.

That said, the only thing that will decidedly tip the scales in a bearish direction (aside from the S&P 500’s cross below its 200-day line) is the VIX’s move above its ceiling at 26.0. There’s little doubt that the VIX’s underlying psychology is keeping a lid on it right now, which more or less says traders are ready and willing to bet on a pullback – and then make one happen – but they’re not making it happen just yet.